Nigeria has decisively reclaimed the mantle of Africa’s top oil producer, with rising output and crude prices spurring growth in the continent’s most populous country. But the same industry driving the economy—oil—faces a host of challenges.

In the next month, Nigeria’s national assembly is expected to approve energy legislation that U.S. and European oil executives warn could curtail investment. The presidential election early next year may reignite fresh violence in the Niger Delta, the West African country’s main oil region, where Royal Dutch Shell says its pipeline was attacked recently.

The sabotage reflects longstanding discontent among the poor in the area. Some attacks are conducted by oil thieves who set up illegal refineries.

Nigeria—which holds the world’s ninth-biggest proven oil reserves— produced almost 2.2 million barrels a day in July, its highest average since November 2007, according to analysts and traders.

The upswing stems largely from a lull in militant violence against Niger Delta oil pipelines and is linked to a government amnesty deal for militants who had been on a bombing spree against oil-industry infrastructure.

Thanks to the relative peace, idle oil fields are pumping again, allowing Nigeria this year to consistently produce more crude than Angola, Africa’s second-biggest producer.

Output has also increased amid the rise in fuel prices this year. Benchmark U.S. crude prices are expected to average $78 a barrel in 2010, up from $62 last year. That could push Nigeria’s economy to expand by about 7% this year, some analysts say, putting it among the fastest growing in Africa. But the rising crude output masks weaknesses in the industry.

An ominous sign for Nigeria’s production is slumping international investment. Foreign direct investment, mostly in the petroleum sector, sank to $5.85 billion last year from $13.96 billion in 2006, according to a recent United Nations report.

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By WILL CONNORS, SIMON HALL and DAVID WINNING

ACCRA, Ghana—Exxon Mobil Corp. said Wednesday it has canceled plans to buy $4 billion in oil assets here controlled by Kosmos Energy LLC, dealing a blow to the U.S. oil company’s drive to tap an important new oil region in West Africa and possibly triggering a scramble for a stake in a new frontier market.

“ExxonMobil has terminated the share purchase agreement with Kosmos Energy,” an Exxon spokesman said. The spokesman declined to provide further details of the talks.

The move ends fraught negotiations over a large chunk of one of the oil industry’s biggest recent discoveries and opens the door for other players—namely Chinese state-run oil company Cnooc Ltd.—to enter the Ghana oil market just months before production begins.

In June, Ghana’s state-run oil company GNPC signed an agreement with Cnooc valued at more than $4 billion to purchase the Kosmos stake, according to a person in Ghana familiar with the situation. This month, President of Ghana John Atta Mills had scheduled a meeting with the State Department’s top official for Africa, Johnnie Carson, to inform him that the government of Ghana would not approve the Exxon-Kosmos deal.

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LAGOS, Nigeria—Two top Nigerian stock-exchange officials were removed and a fugitive former bank executive surrendered, as efforts to clean up the financial sector accelerate.

These developments, together with an expected cabinet reshuffle by President Goodluck Jonathan, come just months before January presidential elections. Mr. Jonathan’s effort to project a cleaner government is considered a centerpiece of his election platform—though he has yet to officially declare his candidacy—and a former head of the country’s financial crimes watchdog is expected to run against him.

On Thursday, Nigeria’s Securities Exchange Commission named Emmanuel Ikazoboh, a former chief executive of accounting firm Deloitte in West and Central Africa, as interim stock-exchange head.

The appointment comes a day after a shakeout at Nigeria’s Stock Exchange, Africa’s second largest. Stock Exchange Director-General Ndi Okereke-Onyiuke was fired and the exchange’s president, Aliko Dangote, was suspended. Mr. Dangote, head of a business conglomerate, is one of Nigeria’s richest men.

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“If it’s too slow, they won’t dance,” Mr. Hlungwani says. “They will tell you straight: ‘It’s too slow, can’t it be faster?’”

Mr. Hlungwani, 40, is the producer and driving force behind a new, ultra-fast take on traditional Shangaan music, which derives from the ethnic group of the same name and originated in Mozambique and northern South Africa.

Shangaan Electro, as it has been dubbed by U.S. and U.K.-based promoters, is garnering attention both within South Africa and abroad. The London record label Honest Jon’s recently put out an album (”Shangaan Electro: New Wave Dance Music from South Africa”) of 12 tracks by various Shangaan artists that Mr. Hlungwani produced.

His records have won a number of awards in South Africa. The South African branch of Kentucky Fried Chicken used one of his songs for a recent TV and radio ad campaign. And a YouTube clip featuring one of Mr. Hlungwani’s more successful artists and some break-neck Shangaan dancing has been viewed close to one million times since it was posted in 2007.

The music itself is stripped down to basics: syntehiszier-produced marimba beats, high-pitched singing, and the notable lack of any bass beats at all. But the most riveting aspect of the music is the speed.

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The terror group behind last weekend’s deadly Uganda blasts recruited a local man to coordinate the attacks and received funds from al Qaeda, say investigators, as it extends its reach beyond lawless Somalia.

Al Shabaab, the Somalia-based group that has claimed responsibility for July 11’s triple suicide blasts that killed 76 people in Uganda’s capital, Kampala, has in recent months built up Pakistan-style terror training camps. One top leader, Sheikh Muktar Robow, has helped to transform the group from a local insurgency into a global jihadist organization modeled on, and swearing allegiance to, al Qaeda.

That picture of the group, and its development under Mr. Robow, emerged from interviews with Ugandan, Kenyan and U.S. investigators; current and former U.S. intelligence officials; and Somalis, including a member of the militant group.

A U.S. intelligence official said information gleaned from militant communications shows links between al Shabaab and al Qaeda leaders in Pakistan and Yemen. U.S. officials also see evidence of overlap in training and membership and say their working assumption is that al Shabaab has several hundred core members, similar to the numbers in al Qaeda in Pakistan and in al Qaeda’s Yemeni outpost.

Intelligence officials say they believe al Qaeda is using the Somali group as a symbiotic host body, allowing its operatives access to other African countries. “As much as we’re looking at al Shabaab, they are riding on the back of a more experienced player,” said Col. Herbert Mbonye, the director of counterterrorism for Uganda’s military intelligence body.

That relationship has raised red flags at U.S. intelligence agencies. In the past 18 months, militant training camps have emerged in Somalia similar to those that developed in Pakistan’s tribal areas, a U.S. intelligence official said. Intelligence officials are now following about two dozen individuals from the U.S. and other Western countries who may have been affiliated with al Shabaab, or gone through these camps.

“It’s quite an alarming story,” the U.S. intelligence official said.

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The Obama administration on Thursday said it would bolster its support to the African Union troops providing much of the firepower in Somalia’s battle against al Shabaab, the Somali militant group that has claimed responsibility for Sunday’s deadly blasts in Uganda.

The triple bombing in Kampala, Uganda’s capital, killed 76 people, including one American, gathered in a restaurant and a bar during Sunday’s World Cup soccer final.

Ugandan officials say they believe more than 20 members of Somalia’s al Shabaab militant group entered Uganda several months before the blasts. Ugandan authorities have arrested nine people, all Somalis, in connection with the attack since Monday, according to a Ugandan military official close to the investigation.

Uganda is part of an African Union force that launched an offensive early this month, alongside Somalia’s government, against al Shabaab militants who control large swaths of largely lawless Somalia.

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KAMPALA, Uganda — A local Muslim extremist group may have assisted Somalia-based militants al Shabaab in carrying out Sunday’s deadly bombings here, say security officials, in a sign the two unaffiliated organizations may be drawing closer together for attacks on shared targets.

Ugandan police and military officials say they have evidence that the Allied Democratic Forces, or ADF, a Ugandan rebel group based near the mountainous border with the Democratic Republic of the Congo, was involved in the blasts, in which at least 76 people were killed.

But they haven’t shared that evidence thus far, and the links made publicly appear largely speculative.

Al Shabaab claimed responsibility for the attacks. The Islamist group, which is trying to topple the Somali government, is calling for Ugandan and other African Union peacekeeping forces to withdraw from Somalia. The Somali government controls only a piece of the capital, with most of the rest of the country under the sway of al Shabaab, clans, other militants and pirates.

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HALFWAY BETWEEN CAPE TOWN AND JOHANNESBURG, South Africa

It bypasses elephant crossings in Botswana, a sandstorm in Egypt and a rat-infested river in Sudan. After driving through 15 countries, the road took its toll: 50 new shock absorbers, dozens of flat tires, five new engines and four severed romances, including one divorce. There was even a death in Malawi.

Only a handful of ruddy young Dutch fans remain from the original 44. They are now making their way from Cape Town to Johannesburg for the soccer World Cup championship, between Netherlands and Spain, in the final stretch of a long, mostly happy journey overland through Africa.

They expect to arrive at a Johannesburg campsite Saturday morning, capping an epic journey that dispelled many myths about the continent.

Their most hospitable hosts: the people of Sudan, a country that until 2005 had been embroiled in civil war and is still headed by a president who is wanted by the International Criminal Court for war crimes. One Sudanese invited the entire group for lunch. Close behind were the people of Libya, ruled by Muammar Gaddafi, who Washington once accused of harboring terrorists and trying to acquire weapons of mass destruction. The Libyans provided the Dutch with a police escort through the country.

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JOHANNESBURG

Regional neighbor Nigeria has oil—and another scandal.

After Nigeria returned home with two losses and a tie in the World Cup, President Goodluck Jonathan suspended the team from international competition for two years. Presidential spokesman Ima Niboro on Wednesday also said the Nigeria Football Federation, which oversees the national team, was being investigated for corruption and misuse of funds.

The contrasting World Cup fortunes of the two soccer-loving nations, separated by the two wisp-thin countries Togo and Benin and sharing a common language, English, say a lot about the realities in each place.

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The Nation Is a Titan in Lawn Bowling, If Not Soccer; a Break for Tea and Whiskey

printed on Page A1 of the Wall Street Journal

By WILL CONNORS

JOHANNESBURG, South Africa—On a crisp morning, middle-aged men in white pants and white shoes met on a patch of grass here, attempting to bowl a biscuit.

The hundred or so players were competing in a local lawn-bowling tournament, where a “biscuit” is a good shot. But while they came to compete, they were keeping their heads down. No tickets were sold for the event, and there were few spectators. The bowlers didn’t want to upset the organizers of that other big tournament in town, the World Cup.

“Everybody’s hanging back,” says John McArdle, president of World Bowls, the international lawn bowling association.

Local lawn bowlers say they would have preferred to have held a larger, international tournament. But, they say, they consented to a general request from soccer’s governing body, FIFA, not to hold major events during the World Cup.

A FIFA spokeswoman says the Zurich organization doesn’t forbid events taking place, but frowns on those in host cities that “might have an operational impact on the preparations or organization” of the Cup.

The idea that lawn-bowling might pose a threat to the world’s biggest team-sport spectacle might sound far-fetched. Bowling, after all, is a pastime where players often sip whiskey and smoke cigarettes on the field. But as in cricket and rugby—but not in soccer—South Africa is a global powerhouse in lawn bowling.

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